ALEXANDRIA, Va.—Visa is reportedly lowering swipe fees for U.S. small business by 10%, Reuters reports. The fee reduction would take place next month and is geared toward helping businesses recover from the COVID-19 pandemic.
In a confidential document obtained by Reuters, Visa says it’s reducing rates for both online and in-person consumer credit transactions for 90% of U.S. businesses. The swipe-fee reduction applies to retailers with $250,000 or less in Visa consumer credit volumes, Reuters reports.
“Businesses have not been informed of Visa’s plan or how it would work,” said Doug Kantor, NACS general counsel and executive committee member of the Merchants Payments Coalition. “There is reason to be skeptical because last year Visa publicly said it would not raise fees but did so anyway.”
Visa and Mastercard—which control nearly 80% of the U.S. credit card market—are implementing a $1.2 billion increase in swipe fees next month. The increase was delayed from a year ago after members of Congress said it would “undermine efforts to help the economy recover.”
Swipe fees for Visa and Mastercard credit cards average 2.22% of the transaction amount and totaled $61.6 billion in 2020, up 137% over the previous decade, according to the Nilson Report. When all types and brands of cards are included, processing fees totaled $110.3 billion in 2020, up 70% over 10 years.
In the U.S., credit card swipe fees remain one of the highest operating costs for convenience store retailers after labor, according to NACS State of the Industry data. Consumer preferences for more touch-free transactions and the coin circulation challenge in summer 2020 led to record debit and credit card usage at convenience stores. In 2020, 74.6% of all transactions were paid by plastic, and overall card fees paid by the convenience store industry were $10.7 billion, NACS SOI data indicate.
The fees have been a growing concern as consumers have shifted from cash to plastic during the pandemic, with the Fed saying cash accounted for only 23% of purchases in 2020, down from 32% just two years earlier in 2018, while credit and debit cards grew to 65% from 59% in the same period. A recent Visa study found 53% of consumers expect to stop using cash within the next 10 years.
MPC launched an advertising campaign to educate Congress and other policymakers on the swipe fees and the impact they have on consumers, small businesses and the U.S. economy.
In February, MPC asked U.S. officials to address credit card swipe fees following the announcement that Amazon has agreed to continue accepting Visa credit cards in the United Kingdom. Amazon and Visa announced that the companies have reached a “global agreement” under which Amazon will continue accepting Visa credit cards. In addition to taking the cards in the U.K., Amazon will reportedly drop a surcharge that had been imposed on Visa credit card transactions in Singapore and Australia.